Wednesday, November 2, 2011

U.S. District Judge Ellen L. Hollander sentenced Michael A. Gmeinwieser, age 38, of Severn, Maryland, [] to 41 months in prison followed by three years of supervised release for wire fraud in a scheme to divert over $3 million in settlement funds intended to pay off the previous mortgage on the properties to himself and his company. Judge Hollander also ordered Gmeinwieser to pay restitution of $3,041,497.

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According to Gmeinwieser’s plea, he was the sole owner of Innovative Title LLC (“Innovative”) located in Odenton, Maryland, and was responsible for preparing settlement statements, issuing title insurance, disbursing mortgage proceeds and other funds, and ensuring that relevant paperwork was properly completed for real estate closings. Gmeinwieser arranged real estate purchase or refinancing transactions that entailed temporarily depositing funds from a mortgage lender into Innovative’s escrow account to pay off the lien secured against the property by a prior lender.

From 2005 to 2009, instead of transferring the funds held in escrow to the prior lender as promised, Gmeinwieser diverted the funds to other uses for himself and Innovative. Gmeinwieser’s misappropriation of funds occurred during real estate transactions involving third party borrowers as well as transactions in which he refinanced mortgages secured by properties he owned.

After carrying out refinancing transactions involving third party borrowers, Gmeinwieser made monthly mortgage payments on the borrower’s behalf in an effort to decrease the likelihood that the borrower would discover that their original loan had not been paid in full as agreed.

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